Introduction, 596. — Innovation and technological change, 597. — Invention and innovation, 599. — Summary and conclusions, 605.

R ECENT discussion of future farm output requirements ' have stressed heavily the important role which technological progress is expected to play in meeting the projected output requirements. This is as true of the studies which have emphasized the transitory nature of present food surpluses 2 as of the studies which point to continuation of the present pressure of food supplies on population. I In spite of this emphasis on the importance of technological change, these studies have generally failed to make explicit the relationship between technological progress and changes in factor input requirements other than labor inputs. This failure seems to stem from use of an analytical scheme which fails to distinguish between technological change and change in labor productivity, thus confusing the contributions to farm output made by technological change and increased nonlabor inputs.4 In this paper, I shall attempt (a) to outline an analytical scheme which distinguishes between the contributions of technological change and increased nonlabor inputs, (b) to present a set of alternative technological change and factor input models for American agriculture which will illustrate the possible consequences of alternative rates of technological change on certain aggregate input categories during the next quarter century, and (c) to discuss some questions of agricultural policy stemming from the close relationship between technological change and input requirements.

In a recent article in this journal, Professors Sinai and Stokes (1972) presented a very interesting test of the hypothesis that money enters the production function, and they suggest that real balances could be a missing variable that has contributed to the unexplained 'residual' being attributed to technological The theory of induced innovation, as presented by Fellner (1961) and Schmookler (1966), suggests that market conditions affect the demand for innovation and the realized technological changes. Since money may be regarded as a proxy for short-run fluctuations in the aggregate demand, this theory suggests that money affects output and technological changes as a demand factor rather than as a factor of production. In this note, we suggest the appropriate tests to distinguish between the two alternative hypotheses, and present some empirical results.